Theranos was an immigration and H-1B story

Bad Blood, the authoritative book on the rise and fall of Theranos, describes American- and British-born engineers and scientists being fired for saying “the goal is too ambitious” or quitting when realizing this. Who replaced them? According to the book, almost all immigrants from India, either folks who’d recently completed a degree in the U.S. or coming over on H-1B visas, all managed by Ramesh Balwani, Elizabeth Holmes’s boyfriend.

During the “grand fraud” stage of Theranos, therefore, it was a primarily immigrant show except for the young impresaria.

[I’m going to guess that neither Mr. Balwani nor any of these engineers and scientists make it into the children’s book First Generation: 36 Trailblazing Immigrants and Refugees Who Make America Great…]

The money to fuel the craziness of Theranos seems to have been all domestic. Walgreen’s kicked in $100 million(!) as an “innovation fee” and then loaned the company another $40 million, according to the book. The credulous yet imperial CEO Steve Burd (Wikipedia shows him hanging out with Barack Obama) drained huge amounts of Safeway shareholder cash to help Theranos. The idea in both cases was that Theranos devices were supposed to be placed in these retailers’ stores.

If the end result is a tech staff that is mostly Indian, I wonder if the Silicon Valley location makes sense. Why not have all of the engineers and scientists work from Bangalore or Delhi? Instead of 8 people sharing a two-bedroom apartment in Menlo Park, each of those 8 workers can enjoy his or her own comfortable house (rent for a 3BR apartment in the center of Bangalore is about $570/month (source), 1/10th the price of Menlo Park (source)). What’s the advantage of bringing H-1B slaves over to toil on a Silicon Valley plantation compared to running the tech farm in India?

(Another interesting aspect of the book is learning just how much room there is for human error in traditional medical lab tests, e.g., in the handling of reagents. Elizabeth Holmes was not wrong in thinking that a fully automated process could potentially be more reliable.)


7 thoughts on “Theranos was an immigration and H-1B story

  1. Thanks for sticking with this thread, I’ve decided to buy the book. Paying to keep the tech. staff living in Silicon Valley instead of Bangalore or Delhi might have had something to do with Balwani’s personality. From the Wikipedia link: “He was described by former Theranos employees as overbearing, uncompromising, demanding and so secretive and worried about industrial espionage that he verged on paranoia.[1]” If he was that worried about it, maybe in his mind it was worth the money (which he had, in abundance!) to keep those people close at hand instead of 7,500+ miles away, the better to keep an eye on them? Also, it would have given him a lot of power. If your H-1B employer requests to have your petition revoked (read: fires you), you have a serious problem and need to get crackin’ or back you go. Prior to January, 2017 there was no grace period (now it’s 60 days), so he had some real leverage over the folks he brought from India to live and work in sunny California. More management lessons.

  2. The last boom was a strange pivot to onshore insourcing, when in 2003, they couldn’t move jobs to Bangalore fast enough. Many misdiagnoses & wrongful prosecutions are indeed because of clerical errors in handling biological samples. There are thousands of microfuge tubes & steps involved in the typical DNA investigation. It’s still organized manually, like 30 years ago.

  3. As Alex pointed out, the H1B gives an employer tremendous power over a would-be immigrant employee. The right to enter and work in the US is bestowed upon an employee by an employer, and the employer determines the circumstances under which the employee is permitted to remain in the US.

    All that Theranos could offer a US citizen in the US is a job. All that Theranos could offer an Indian citizen in India is a job. It might pay nicely, but there’s a limit to what an employee will put up with.

    But if you wish to immigrate to the US, and you don’t have relatives here and can’t use family reunification, there aren’t a lot of options. Some people will claim that the H1B employee can’t change jobs – that isn’t entirely accurate, as it is possible to change employers without losing your spot in the green card queue, provided your new employer will sponsor you. However, there are very substantial barriers, and the mobility is severely limited. You certainly can’t quit tech and go to law or med school, or start your own consulting company, or become a florist or open a deli, or any of those pesky things free people choose over becoming a developer in the valley.

    This is an interesting twist, though. I always thought of this as more of an financial coercion – the H1B provides silicon valley with a workforce that is not allowed to participate in free labor markets in response to market signals and their own talents and interests. This is useful for staffing positions at wages lower than it would take to convince free people to work those jobs.

    But sure, unfree workers are very useful if you want employees who will agree to work on scientifically hopeless (and possibly criminal) projects.

  4. This was a really interesting read. Apparently, “move fast and break things” and “fake it until you make it” aren’t good ideas for producing medical products. Who knew?

    What I found most interesting was the extent that Theranos and their law firm went to, in order to intimidate sources and the Wall Street Journal. It was like the CIA and Soviet KGB, combined with threats of legal financial ruin for those who would speak up about the fraud.

    Silicon Valley is full of companies who overpromise and underdeliver, mostly in pursuit of quick riches. The only difference with Theranos is that this was a medical device company, and that puts people’s lives at risk.

    The internal pressure was so great, a top British scientist who served as chief scientist, committed suicide.

    All of this to deliver on Elizabeth’s “dream” of doing a wide variety blood tests on a tiny amount of blood.

    The press described Elizabeth as a “scientist,” even though she had only completed two years of college in chemical engineering. Apparently, she had good sale skills, as she was able to raise $900 m in technology which didn’t work. It’s certainly true they fired anyone who pointed out this inconvenient truth, and anyone who was willing to go along was kept on the payroll.

    The book was fascinating. Highly recommended.

Comments are closed.